Casualties,   Disasters,   and Thefts

Taxmap/pubs/p547-000.htm#TXMP18e74088 Reminder

Taxmap/pubs/p547-000.htm#TXMP28e5e9aa
Photographs of missing children.

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication explains the tax treatment of casualties, thefts, and losses on deposits. A casualty occurs when your property is damaged as a result of a disaster such as a storm, fire, car accident, or similar event. A theft occurs when someone steals your property. A loss on deposits occurs when your financial institution becomes insolvent or bankrupt.

This publication discusses the following topics.

• Definitions of a casualty, theft, and loss on deposits.
• How to figure the amount of your gain or loss.
• How to treat insurance and other reimbursements you receive.
• The deduction limits.
• When and how to report a casualty or theft.
• The special rules for disaster area losses.

Taxmap/pubs/p547-000.htm#TXMP03f3c465 Forms to file.

When you have a casualty or theft, you have to file Form 4684. You will also have to file one or more of the following forms.

• Schedule A (Form 1040).
• Schedule D (Form 1040).
• Form 4797.

For details on which form to use, see How To Report Gains and Losses, later.

Taxmap/pubs/p547-000.htm#TXMP621e94e6 Condemnations.

For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544.

Taxmap/pubs/p547-000.htm#TXMP30661311 Workbooks for casualties and thefts.

Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. It includes schedules to help you figure the loss on your home and its contents, and your motor vehicles.

Publication 584B is available to help you make a list of your stolen or damaged business or income-producing property and figure your loss.

Taxmap/pubs/p547-000.htm#TXMP51236875 Comments and suggestions.

We welcome your comments about this publication and your suggestions for future editions.

You can write to us at the following address:

 
Internal Revenue Service  
Individual Forms and Publications Branch  
SE:W:CAR:MP:T:I  
1111 Constitution Ave. NW  
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

Taxmap/pubs/p547-000.htm#TXMP75ba833d Tax questions.

If you have a tax question, visit www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either of the addresses listed above.

Taxmap/pubs/p547-000.htm#TXMP0c15e625 Ordering forms and publications.

Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to one of the three addresses shown under How To Get Tax Help in the back of this publication.

Useful items

You may want to see:

See How To Get Tax Help near the end of this publication for information about getting publications and forms.

Taxmap/pubs/p547-000.htm#TXMP520ef730 Casualty

Casualty and Theft Loss

A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

• A sudden event is one that is swift, not gradual or progressive.
• An unexpected event is one that is ordinarily unanticipated and unintended.
• An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged.

Taxmap/pubs/p547-000.htm#TXMP7eeec689 Deductible losses.

Deductible casualty losses can result from a number of different causes, including the following.

• Car accidents (but see Nondeductible losses, next, for exceptions).
• Earthquakes.
• Fires (but see Nondeductible losses, next, for exceptions).
• Floods.
• Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, later.
• Mine cave-ins.
• Shipwrecks.
• Sonic booms.
• Storms, including hurricanes and tornadoes.
• Terrorist attacks.
• Vandalism.
• Volcanic eruptions.

Taxmap/pubs/p547-000.htm#TXMP766722af Nondeductible losses.

A casualty loss is not deductible if the damage or destruction is caused by the following.

• Accidentally breaking articles such as glassware or china under normal conditions.
• A family pet.
• A fire if you willfully set it, or pay someone else to set it.
• A car accident if your willful negligence or willful act caused it. The same is true if the willful act or willful negligence of someone acting for you caused the accident.
• Progressive deterioration (explained next).

Taxmap/pubs/p547-000.htm#TXMP4d0454fd Progressive deterioration.

Loss of property due to progressive deterioration is not deductible as a casualty loss. This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. The following are examples of damage due to progressive deterioration.

• The steady weakening of a building due to normal wind and weather conditions.
• The deterioration and damage to a water heater that bursts. However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty.
• Most losses of property caused by droughts. To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit.
• Termite or moth damage.
• The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss.

Previous Page:  Publication 544 - Sales and other Dispositions of Assets - How To Get Tax Help Next Page:  Publication 547 - Casualties, Disasters, and Thefts (Business and Nonbusiness) - Theft Use     to find additional instances of index items.